There are several important questions surrounding the regulation of sports betting in the U.S. Several issues have to be resolved to ensure safety and fairness of the sport. Among them are the tax rate, the governing body, and the integrity of the game. Ultimately, the issue boils down to money. As a state, you must decide whether you want to regulate sports betting, and how much tax to levy.
Legalization of sports betting in the U.S.
Legalization of sports betting is coming to a number of states across the U.S., including New Jersey, Illinois, and Pennsylvania. While most states won’t be able to offer the products until at least two years down the road, Illinois recently legalized both in-person and online sports betting. Illinois is one of the most populous states in the country, and is one of the five states that generate the most tax revenue. The state’s in-person registration requirement will expire permanently on March 5, 2022, and five online sportsbooks have already launched.
New Jersey became the “Vegas East” state after legalizing sports betting, and New York missed out on $1.3 billion in tax revenue by not legalizing sports betting when the state decided to. In North Carolina, meanwhile, sports betting was legalized for two tribal casinos in 2019, and bettors could place bets starting in March 2021. The state was one of the frontrunners for legalizing sports betting online in 2022, but it fell one vote short of achieving this goal. The governor, however, acknowledged that many lawmakers wanted to explore the issue further.
Regulation of sportsbooks
The House of Representatives is considering a bill to regulate sportsbooks. The lawmakers are worried about match-fixing, advertising and online platforms targeting minors. They also cite the 1919 Black Sox scandal, which resulted in the suspension of nearly all Chicago White Sox players. They are seeking more regulation to protect the public and make sports betting safer.
In Chicago, the city council voted in favor of regulating sportsbooks within a five-block radius of a sports venue. However, there was significant dissent among council members on the proposal. The new rules will allow 15 sportsbooks within five blocks of a stadium and require the sportsbooks to pay the city 2% of their gross revenue. Still, the proposed legislation poses a number of legal hurdles to sportsbook operators.
Safety of funds in regulated markets
In regulated markets for sports betting, you can be assured that your funds are safe. The same cannot be said about offshore sites and the black market. Moreover, regulated sportsbooks are accountable to licensing bodies. This means that they won’t suddenly go belly-up and shut down without warning. Another benefit of regulated markets for sports betting is the ability to deposit funds through multiple methods.
New Jersey and Pennsylvania both have strict regulations to protect customer funds. Both states require sports betting operators to maintain separate bank accounts with a minimum balance of $500,000, file monthly attestation with the state’s DGE, and keep enough money to cover all open bets. Pennsylvania also requires full segregation of customer funds. The practice is likely to be copied in other regulated states.
Problems with unregulated markets
Corruption in sports betting is one of the major issues in the industry. Unlike the U.S. gaming industry, which is heavily regulated with more than 4,000 state regulators, unregulated markets have no regulators and cannot ensure the integrity of games or bets. These markets are also a major source of money laundering, human trafficking, and drug trafficking.
Illegal markets for sports betting attract transnational organized crime groups, which is linked to match-fixing. The American Gaming Association (EGBA) has called for greater regulation of sports betting and other forms of gambling to protect consumers. However, despite efforts to protect consumers, some of these illegal markets have still not been fully regulated.